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Flash Sales: Exploring Short-Term Big-Discount Options

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Flash Sales: Exploring Short-Term Big-Discount Options

July 2012

by Linda Carlson

 

The bricks-and-mortar one-day sale with limited inventory and deep discounts now has a popular online version, the flash sale. Although flash sales have much in common with the sample sales, closeouts, and one-day specials that retailers have offered for decades, everything about them takes place online. All the promotion is online, via email, Twitter, Facebook, the seller’s own Web site and blog, and other social media sites. And all sales are made through the seller’s Web site or through a flash-sale site run by a retailer that exists only to offer limited-time sales of everything from baby strollers to Balenciagas.

The goal of flash sales is “to create a crowd-like atmosphere,” said Boyan Josic, the editor and founder of Daily Deal Media, which tracks social commerce, when he was interviewed by the Milwaukee (WI) Journal Sentinel earlier this year. For the same article, Brian Peters, director of marketing strategy and operations for the Seattle consulting firm ARRYVE, described flash sites as “impulse-based” and “competitive.”

The time constraints of flash sales force hasty decisions. Usually, they’re scheduled for no more than a few days, or until inventory is exhausted, which often occurs first. And unlike in many physical stores, there’s likely to be no cure for buyer’s remorse. Many sales are final, or offer only gift cards on returns.

Judging by information from several IBPA members, results of publishers’ short-term sales vary from great to dismal. Many smaller publishers have no experience with flash sales either as buyers or as sellers, despite flash-sale sites having been around and gaining users for more than five years.

Gilt Groupe (gilt.com) began offering big-ticket fashion, furnishings, and other merchandise at “insider prices” on a members-only basis in 2007; by early 2012, the Boston Globe could report that there were more than 80 flash-sale sites in the United States. A year ago these sites attracted almost 41 million visitors a month. Since that figure represents a 109 percent increase in shoppers over summer 2010, just imagine how many people are browsing flash-sale sites today. And, yes, some do buy books. The Globe story quoted a woman who said she’s bought so many coffee-table books at flash sales that her coffee table can’t support any more.

 

Flash-Sale Sites SOP

How do these flash-sale sites generate so much business?

● They build databases of email addresses by requiring registration, and they use the databases for daily teasers and sale announcements. Registration can happen almost without you knowing it; if you’re an Amazon customer, for instance, you may find yourself receiving sales bulletins seven days a week from its My Habit without realizing that you had opted in.

● They design their messages well, using beautiful product photography that almost compels you to open the email.

● They play to our lust for bargains. “Buy now or miss out on this deal forever” is what the text communicates.

● They offer discounts that can be significant. Gilt claims to offer as much as 60 percent off list price, and judging by my own comparisons of My Habit prices with what I’ve paid in stores (and with prices on sellers’ own Web sites), its discounts are easily 25 to 35 percent off list.

● Some flash-sale sites offer merchandise credits to customers who bring in new customers.

● Many of the sites promote several merchandise types in each sale: apparel and footwear for men, women, and children; lingerie, jewelry, home accessories, kitchenware, cosmetics, and fragrance. As I write, Fab.com, which claims discounts of as much as 70 percent, is offering garden trellises, scratching toys for cats, and concrete serving dishes as well as more typical high-fashion goods.

The sites don’t always make money. Several of the big names, including Gilt Groupe, had significant layoffs early this year, even as industry analysts were predicting how much the flash-sale market will grow in the next few years.

Those that stay profitable do so with such tactics as:

● Charging for shipping.

● Making returns inconvenient. (Besides offering only gift cards for returns and making customers pay the return shipping fees, some sites levy restocking fees. And some also improve their cash flow by creating incentives for customers to use up the store credit and then some.)

● Not stocking inventory. In many cases, the flash-sale site doesn’t make any sales commitment until it has orders.

And, of course, the sites negotiate with the companies whose products are promoted. None of the sites I contacted would provide any details. Seattle-based Zulily’s spokeswoman Sara Whitfield said only, “We can’t give specifics regarding discounts accepted. We work individually with each vendor.” (At zulily.com/index.php/vendor, you can submit information about your products and peruse the list on the left, “Brands We Love,” to see which publishers have participated in Zulily sales. As I write, the only one listed is Workman. The sales blurb said that it had offered discounts of “as much as 40 percent” on the site. In other words, prices for Workman products there were still more than wholesale.)

 

Experiments with Short-Term Sales

When Publishing Trends did a story on flash-sale sites last September (see publishingtrends.com/2011/09/flash-sale-models-and-publishers-place-in-the-changing-landscape-of-online-retail), big publishers were among those who expressed enthusiasm about them as a sales channel for coffee-table books, cookbooks, and classic or nostalgic children’s books.

Some spokespeople for the flash-sale sites referred to having worked with smaller publishers, but no smaller publishers were quoted in this article, and no IBPA members have reported using such sites. However, some members have tried short-term sales of their own, with a huge range of results. (See “Our E-book Pricing Experiments,” June.)

At Judson Press in Valley Forge, PA, marketing director Kim Shimer finished 2011 with a “12 days of Christmas” promotion, offering a different title for half-price each day. “I promoted it via email, inviting folks to sign up for daily e-alerts re: the book of the day, and also promoted it and announced the book daily to our 460-plus Facebook followers and on Twitter,” she reports.

Responses were extremely disappointing, with fewer than 25 people requesting the daily alerts and only a book or two sold. But, Shimer adds, Judson’s Facebook followers seldom respond on any topic—sale, survey, or specific question.

At StarWarp Concepts in Sunnyside, NY, publisher Steven Roman is just as disappointed about a spring Smashwords sale. “March 4–10 was the eighth annual Read an E-Book Week, and with the goal of expanding our readership we joined the e-book distributor’s tie-in to the event,” he says. The publisher offered its young adult dark-urban-fantasy novel, Blood Feud: The Saga of Pandora Zwieback, Book 1, for $1—75 percent off the normal price of $3.99.

With lots of publicity on Twitter, Facebook, comic book blogs, and other online sites, Smashwords recorded more than 150 views of Blood Feud’s page, and a sharp increase in downloads of the free sample chapters. The upshot, says Roman, was “Books sold: two.”

By contrast, participating in Amazon.com’s Daily Deal promotions for Kindle editions has resulted in dramatic sales for Berrett-Koehler. In January, when the 2007 edition of Brian Tracey’s bestselling Eat That Frog! 21 Great Ways to Stop Procrastinating and Get More Done in Less Time was offered for 99 cents, sales volume shot up from 400 units per month to 20,000 during the 24-hour sale. Maria Jesus Aguilo, subsidiary rights director for BK, credits the timing of the promotion—right when New Year’s resolutions were being made and when many e-readers had been received as holiday gifts—for part of the success, and she notes that sales volume for the title stayed steady at 700 units per month for several weeks.

In February, Amazon chose BK’s I Moved Your Cheese: For Those Who Refuse to Live as Mice in Someone Else’s Maze by Deepak Malhotra for a Daily Deal, and 15,000 copies of the Kindle edition were sold. The promotion also prompted so many sales of the print edition that each format was #1 in its category for a few days on Amazon.com, and both made the Wall Street Journal bestseller list.

Even when sales don’t skyrocket to bestseller levels, Aguilo says these kinds of promotions are excellent for creating visibility for titles. When another Tracey title, Kiss That Frog! 12 Great Ways to Turn Negatives into Positives in Your Life and Work, was featured by Amazon in its month-long Big Deal, e-book sales increased from 76 per month to 3,000.

At Australia’s Red Dog Books, publisher Andrew Kelly had a similarly significant sale—and that was before Facebook and Twitter were available as promotional tools. In 2008, he recalls, the company promoted a one-day Leap Year sale on its Web site and with email to its mailing list: “We offered to match what people bought with an equivalent value in books of our choosing.” Sales, primarily from schools, totaled about $7,000. The downside that Kelly reports: Red Dog has never been able to duplicate the success.

A holiday special did have continuing results for Village Books in recent years. The Bellingham, WA, bookseller offers a Black Friday $5 gift card with each $25 purchase on the day after Thanksgiving. Owner Chuck Robinson (who also runs POD press Chuckanut Editions) promotes the offer with an email to the store’s list of 9,000, with tweets to its 4,000-plus followers, and on Facebook, where it has some 4,400 “likes.” He doesn’t track retweets or forwards of the sale ad, although he knows they occur. “Each year we’ve taken in a couple hundred coupons or coupon codes, and it has boosted our sales,” he says, adding, “The gift card also brings people back into the store, so we’ve chosen to use that rather than a straight discount.”

 

Practical Pointers

What do you need to know before you offer a flash sale or some other short-term, deep-discount sale?

● Make it simple—for you and for prospective customers. At Toolemera Press in Dedham, MI, publisher Gary Roberts explains why he avoids them: “Flash sales are too labor intensive for me.”

● Make sure your discounted price allows you to at least break even when all costs are included. Limiting the number of books available at an extremely low price reduces your risk.

● Select titles likely to prompt impulse purchases. Berrett-Koehler’s Maria Jesus Aguilo prefers popular backlist or well-publicized frontlist titles.

● Remember to limit the length of the sale. Aguilo believes a short sale period is less likely to lower the perceived value of the book. It also can increase impulse purchases.

 

Linda Carlson (info@lindacarlson.com) writes for the Independent from Seattle, where she has never made a flash-sale site purchase (but has been tempted).


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